I've seen a few comments and posts on here buyers having a big issue with sellers/brokers requesting an earnest money deposit as part of LOI terms. Is it really not market to not have an earnest money deposit in deals like these? I come from a real estate background, so my thinking from putting myself in a seller's position is why on earth would i ever grant exclusivity and go through the headache of a real diligence process without some meaningful skin in the game from the potential buyer. Also goes a long way to show that the buyer can back up whatever claims they're making regarding their ability to actually finance the transaction. As a buyer, I would love for it not to be market, but as a future seller it's something i personally don't think i'd ever agree to. Would like to understand what I'm missing here in my thinking.
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Don’t pay to peek.
Never make an earnest money deposit or sign a purchase contract—no matter how many contingencies are in it—before you and your advisors have analyzed the company, obtained an expert opinion of value and defined alternative terms of purchase.
If you doubt the wisdom of this advice, make an offer on a business you don’t really care about. Later, when you think you know what it is worth, try explaining to the seller why your offer must change.